Inequality
Many people think it is morally bad for there to be wide disparities in the well being of a society. We should also recognize that inequality is actually harmful to a society. There is a lot of evidence, based on cross-national comparisons of inequality and economic growth, that more unequal societies have lower rates of economic growth. The divisiveness that comes out of large disparities in income and wealth, is actually reflected in poorer economic performance of a country.
In countries, that are more equal, educational achievement and benefits are more equally distributed throughout the country. In America, there are huge disparities in resources going to education, which is the reason quality of schooling and schooling performance are unequal. If you have a society with large concentrations of poor families, average school achievement is usually a lot lower than where you have a much more homogenous middle class population, as you find in most Western European countries. Consequently, we end up with a labor force that is less well educated on average than in a country like the Netherlands or Germany. High levels of inequality results in less human capital being developed in that country, which ultimately affects economic performance.
One reason, America has such high levels of inequality, compared to other advanced industrial countries, is because of our tax system. We have much lower taxes and a less progressive tax system than almost every Western European country. Therefore, the rich in our country manage to retain a much higher share of their income than they do in other countries, which enables them to accumulate a much higher amount of wealth than the rich in other countries.
A separate tax on wealth actually exists in a dozen European countries. This has helped to lessen inequality in European countries. If you think about taxes that reflect a family's ability to pay, a family's ability to pay is a reflection of their income, but also of their wealth holdings. A broader kind of tax, would produce more tax revenue, which we desperately need. It would be a fairer tax, and help reduce the increasing level of inequality in America.
In countries, that are more equal, educational achievement and benefits are more equally distributed throughout the country. In America, there are huge disparities in resources going to education, which is the reason quality of schooling and schooling performance are unequal. If you have a society with large concentrations of poor families, average school achievement is usually a lot lower than where you have a much more homogenous middle class population, as you find in most Western European countries. Consequently, we end up with a labor force that is less well educated on average than in a country like the Netherlands or Germany. High levels of inequality results in less human capital being developed in that country, which ultimately affects economic performance.
One reason, America has such high levels of inequality, compared to other advanced industrial countries, is because of our tax system. We have much lower taxes and a less progressive tax system than almost every Western European country. Therefore, the rich in our country manage to retain a much higher share of their income than they do in other countries, which enables them to accumulate a much higher amount of wealth than the rich in other countries.
A separate tax on wealth actually exists in a dozen European countries. This has helped to lessen inequality in European countries. If you think about taxes that reflect a family's ability to pay, a family's ability to pay is a reflection of their income, but also of their wealth holdings. A broader kind of tax, would produce more tax revenue, which we desperately need. It would be a fairer tax, and help reduce the increasing level of inequality in America.
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